Arizona solar plant gets big boost from feds

by Ryan Randazzo - Jul. 3, 2010 09:51 AMThe Arizona Republic

President Barack Obama announced Saturday that the federal government will provide a $1.45 billion loan guarantee through the stimulus act for the Solana Generating Station solar-power plant in Gila Bend.

The plant will be one of the largest solar projects in the country and the first to store heat on a large scale so that it can continue to make electricity after sunset. Its developers have struggled for two years to find a decent loan amid the recession.

Obama discussed the loan guarantee in an advance copy of his Saturday radio address provided to The Arizona Republic. The deal gives the plant the assistance it will need to finally move ahead.

The plant could now open by mid 2013 after originally being scheduled to open in 2011.

The plant will sell its power to Arizona Public Service Co., helping Arizona's largest electric utility meet a state requirement that it get 15 percent of its energy from renewable power sources by 2025.

"We're going to keep fighting to advance our recovery," Obama said. "And we're going to keep competing aggressively to make sure the jobs and industries of the future are taking root right here in America. That's one of the reasons why we're accelerating the transition to a clean energy economy and doubling our use of renewable energy sources like wind and solar power - steps that have the potential to create whole new industries and hundreds of thousands of new jobs in America."

Solana will be built and operated by Abengoa Solar Inc. of Spain.

"After years of watching companies build things and create jobs overseas, it's good news that we've attracted a company to our shores to build a plant and create jobs right here in America," Obama said.

The 280-megawatt plant will be able to generate enough electricity to serve 70,000 houses at once when running at full capacity, and will be able to make power during the peak hours of demand from about 4-7 p.m. when traditional solar panels generate little electricity the low light of dusk.

The entire cost of designing, building and connecting the plant to the power grid is about $2 billion.

Work could begin by the end of summer, said Kate Maracas, vice president of operations for Abengoa Solar, and that wouldn't be happening without the loan guarantee that gives the company access to funds from the Federal Finance Bank.

"It would have been a completely viable project without the crash of the markets," Maracas said. "But lenders became very skittish."

She said Abengoa has been working more than a year with the Department of Energy on the loan.

"There's no doubt in this economy the only way to actually finance a large solar project is through the loan guarantee program," said Rhone Resch, president of the Solar Energy Industries Association in Washington, D.C.

"Obviously the recession has caused a tremendous amount of pain for individuals, but also for businesses trying to borrow money."

Resch said the loan guarantees provide a "good return" to the taxpayer because the companies that get them must pay interest to the government.

"The good news is these are very low-risk loans," he said. "Ultimately it is a good investment with a safe return to taxpayers, but also producing jobs and clean energy."

He said any other large solar plants likely would need similar guarantees in the current market.

"This historic facility will allow 70,000 Arizona homes to be powered with clean, renewable energy from the sun," Giffords said. "The plant also will create construction jobs and skilled permanent jobs which will add substantially to the Arizona economy."

It will take about 1,600 people to build the plant and 85 to run it.

Solana will cover about three square miles of previously farmed land with mirrors that reflect sunlight onto gas-filled tubes. The heat is used to make steam and then electricity.

The plant will use less water than the crops that were grown on the farm.

American companies will earn about $1.1 million in revenue making components for Solana, including two assembly factories to be constructed at the plant. A new mirror manufacturing facility will be sited near Phoenix to supply the plant, employing about 150 people, according to the White House announcement.

About 97,000 receivers will be made for the plant at Schott Solar's factory in Albuquerque.

Obama also announced a $400 million loan guarantee for Abound Solar, which plans to build solar-panel factories in Colorado and Indiana. The Colorado plant is underway and the other will occupy a vacant Chrysler factory.

"Already, I've seen the payoff from these investments," Obama said. "I've seen once-shuttered factories humming with new workers who are building solar panels and wind turbines; rolling up their sleeves to help America win the race for the clean energy economy."